Seriously folks, two articles that are literally one-below-the-other on Bloomberg this morning:
Ford Motor Co. (F), the second-largest U.S. automaker, said first-quarter profit rose 22 percent to the most for the period since 1998 as it won higher prices for fuel- efficient new models.
Got the punch line? People paying more money for the same thing: A car.
Brady Miller is paying more for vinyl siding for his construction business and for groceries to feed his family. He can’t charge customers more, showing why some Federal Reserve officials say inflation will ease.
The Mossville, Illinois, homebuilder also hasn’t given his crew of two a raise in two years and says they shouldn’t expect one soon.
Wait a second……
We got a little problem here. On the one hand we have companies claiming that they’re doing gangbuster business and charging customers more for the same thing, predicated on a claim of better efficiency or whatever have you. (Incidentally, it takes years – if ever – to recover the “savings” from higher fuel economy. An increase of 5mpg in a vehicle’s economy where you started with 25mpg, results in a savings of 100 gallons of fuel per year if you drive 15,000 miles. At $4/gallon that’s $400. $30/month, roughly, is what it “saves” you. How much did the new vehicle cost you again and how much more was the “energy efficient” model?)
On the other hand we have employers saying loudly (and they have been for several years) that there are no raises in the offing – and there haven’t been any raises. At the same time food and energy costs go higher, which means that your disposable personal income after necessities – which include that food and energy – is going down.
Both of these statements cannot be true at the same time, in the general case in the economy. Oh sure, a few companies can exploit someone else’s weakness. But in the general case one of these two claims is false.
“It’s tough,” Feroli said. “Consumers will have to reduce real spending” if they don’t draw down savings or take on more debt.
They can’t take on more debt. There’s no capacity for it. That’s why we hit the wall in 2007, yet everything that has been done since has been undertaken with the singular focus of continuing to lie about what happened, why it happened, and punishing those who were responsible.
Those responsible parties sit on Wall Street and in Washington DC.
That which cannot continue will not continue.
Brace for impact; our government and Federal Reserve are severely deluded, and reality is about to intrude.